The bitcoin price found some stability today following a dip to $86,000 over the weekend, as traders assessed the risks posed by the Federal Reserve, significant recent liquidations, and increasing technical pressure. The largest cryptocurrency experienced a rise of approximately 1%, reaching $87,850 by midafternoon, following a dip to $86,000.13 earlier in the session. Price action exhibited significant volatility, as market participants approached the situation with caution, wary of potential sharp reversals in the wake of a weekend selloff. The spotlight is now on the Federal Reserve’s policy decision set for Wednesday. The central bank is anticipated to maintain interest rates within the 3.50%–3.75% range; however, this meeting has attracted notable attention due to ongoing discussions regarding the Fed’s independence. Recently, President Trump’s administration intensified its confrontation with Federal Reserve Chair Jerome Powell by initiating a rare threat of criminal investigation related to Powell’s management of a significant Fed renovation project.
As Trump seeks to redefine the leadership of the central bank with Powell’s term concluding this spring, he faces legal challenges, including a Supreme Court case regarding his efforts to dismiss a Fed governor. This situation has ignited a wider discussion about the Federal Reserve’s autonomy from political influence. The crypto markets are currently navigating the repercussions of ongoing selloffs, intensified by forced liquidations in leveraged positions. U.S.-listed spot bitcoin exchange-traded funds continued to exert pressure. Spot bitcoin ETFs experienced $1.33 billion in net outflows for the week ending Jan. 23, representing the most significant weekly outflow in almost a year. The redemptions have intensified selling pressure in an already delicate market environment. Corporate bitcoin accumulation continued, yet it did not succeed in stabilizing market sentiment. Strategy., the software company that has pivoted to a leveraged bitcoin acquisition strategy, revealed in a recent SEC filing that it acquired 2,932 bitcoin between Jan. 20 and Jan. 25 for about $264.1 million, with an average purchase price of $90,061 per coin.
The company currently possesses 712,647 bitcoin, with recent acquisitions largely funded by its at-the-market equity offering program. The impact of these purchases on the bitcoin price was minimal. The aggregate purchase price for the company’s holdings is around $54.2 billion, which includes fees and expenses, resulting in an average acquisition price of $76,037 per bitcoin. Bitcoin Magazine analysts report that the bitcoin price experienced a significant bearish reversal last week, ending the week close to $86,588 after struggling to maintain momentum after testing the $98,000 resistance level. The recent development signifies a significant breach of the $87,000 support level, effectively returning near-term market dominance to sellers. The $84,000 level has become crucial. A consistent daily close beneath that support level could heighten downward momentum toward the $72,000–$68,000 range, with a more significant pullback toward $58,000 becoming likely if selling escalates. Bulls are anticipated to fiercely protect the $84,000 level to prevent a more extensive decline. To initiate a bullish trend, buyers need to first reclaim the $88,000 level to stabilize the price action. Further resistance levels are identified at $91,400 and $94,000, with $98,000 acting as a significant barrier. A move above that level seems improbable in the short term; however, a breakout could pave the way toward $103,500.
Technical indicators bolster the bearish sentiment. Bitcoin price has settled beneath the 100-week simple moving average, with the MACD continuing to indicate bearish momentum, while the relative strength index has once again declined. This upcoming week is crucial, as broader market earnings could sway sentiment, although the correlations with equities are still unclear. As of now, the Bitcoin Fear and Greed Index stands at 20 out of 100, indicating a state of extreme fear among those involved in the market. Historically, moments of intense fear have aligned with increased uncertainty and, on occasion, possible buying opportunities as prices dip below perceived value. Bitcoin is currently trading at $87,698. The asset is presently down 1% from its 7-day all-time high of $88,635, while it sits 2% above its 7-day all-time low of $86,126.